Good Business: The Economic Case for Protecting Human Rights

ICAR, Frank Bold, and the Business and Human Rights Young Researchers Summit are pleased to announce the publication of a new report that explores evidence-based economic arguments for companies to promote human rights. The report, entitled “Good Business: The Economic Case for Protecting Human Rights,” was authored by the following individuals:

Dr. Başak Bağlayan, Researcher, Faculty of Law, Economics and Finance, University of Luxembourg;

Ingrid Landau, PhD Candidate, Melbourne Law School, University of Melbourne;

Marisa McVey, PhD Candidate, School of Management, University of St Andrews; and

Its development and publication was supported by the following organizations:

BHR Young Researchers Summit

Frank Bold

ICAR

The Institute for Business Ethics at the University of St. Gallen

NYU Stern Center for Business and Human Rights

The content of this report reflects the views of the researchers, who have worked independently. It is not representative and may not reflect the positions of the supporting organizations.

A short summary of the report is provided below, and the full report can be downloaded here.

Report Summary

While there is ample evidence on the costs of corporate-related human rights abuse borne by society - whether in terms of 1,134 lives lost in Rana Plaza accident, 20.9 million people estimated by ILO to be victims of forced labour, or $1bn needed to restore the environment damaged by oil extraction in Niger Delta - the financial implications for companies, however, are still poorly understood.

Getting more clarity on the costs and risks to companies that result from adverse human rights impacts might help to break the impasse in the implementation of human rights due diligence in companies’ practice as well as in law.

For this reason, the Business and Human Rights Young Researchers Summit, supported by and in collaboration with the ICAR and Frank Bold, launched a project on evidence-based economic arguments for companies to promote human rights. Four talented participants of the Summit’s 2018 cohort conducted in-depth research and led the initial project idea to the publication of this report. Through extensive desk research the four authors unearth available evidence in support of economic arguments for corporate human rights respect in four areas:

Managing how companies affect human rights;

Responding to government incentives intended to protect human rights;

Handling the costs of litigation over corporate abuses; and

Anticipating trends for sustainable business.

The data compiled in this report lead to three broad conclusions:

First, the findings of the research show that corporate human rights abuse can have a significant impact on businesses and this impact is growing consistently.

Second, despite this evidence, there is insufficient focus in the business and human rights debate on human rights risks facing companies and the implications of these risks for companies’ economic position and development, as well as on the importance and the beneficial effects of properly integrating corporate responsibility to respect human rights.

Third, the failure of companies to properly consider such risks appears to be facilitated by a narrow (and sometimes misguided) understanding of their legal responsibility, which is out of sync with growing societal expectations concerning responsible business conduct. In this respect, a more precise regulation of corporate responsibility that would lead to better prevention and mitigation of adverse human rights impact would likely have a beneficial effect for both affected people as well as for companies, which are involved with such impacts.

The main purpose of our research was to identify and organize existing research on this topic. As we anticipated, the state of the research is far from comprehensive. Nevertheless, in each area, we have discovered convincing evidence indicating that costs of ignoring human rights as well as opportunities linked to respecting human rights are underestimated and deserve much greater attention in research, business practice, and public policy making than they currently do.

This report is a first step toward building more evidence-based research on the so-called ‘business case’ for corporate human rights responsibility. It is hoped that a) scholars will find inspiration to continue such research in order to build a more and more robust foundation of evidence; b) policy-makers will leverage on such evidence to make smarter and more effective policies encouraging and requiring human rights respect by businesses; and c) practitioners see value in such arguments to foster and promote the continuous integration of human rights considerations in their strategies and operations.